Custom, Excise & Service Tax Tribunal
M/S Volant Textile Mills Ltd vs Commissioner Of Central Excise, ... on 25 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/1365 & 2588/05 (Arising out of Order-in-Original No. 05/ASR/2005-ADJ dated 31.1.2005 passed by the Commissioner of Central Excise, Pune-III). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Volant Textile Mills Ltd. Shri Rajesh Somani Appellant Vs. Commissioner of Central Excise, Pune-III Respondent Appearance: Shri Aqueel Shirazi, Advocate for Appellant Shri Ahibaran, Addl. Commissioner )AR) for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 25.09.2013 Date of Decision: .10.2013 ORDER NO. Per: P.R. Chandrasekharan
The appeal is directed against Order-in-Original No. 05/ASR/2005-ADJ dated 31.1.2005 passed by the Commissioner of Central Excise, Pune-III.
2. The appellant, M/s Volant Textile Mills Ltd., Solapur, is a 100% EOU engaged in the manufacture of Grey Cotton Fabrics. The raw materials for the manufactures of fabrics are cotton yarn and polyester cotton yarn and they procured the raw materials from M/s Jamshri Ranjit Singhji Spinning & Weaving Co. Ltd., Solapur (M/s Jamshri in short), Shri Gopal Jajoo and M/s Puja Textiles. Investigation in the activities of the appellant revealed that they had in collusion with M/s Jamshri clandestinely manufactured and cleared polyester cotton grey fabrics measuring 8,10,969 meters Valued at Rs.2,66,74,509/- during June/July, 97 to Sept. 98 and again during Sept, 99 to Dec, 99 evading Central Excise duty to the tune of Rs.1,22,35,660/-. Similarly, they had in collusion with Shri Gopal Jajoo and M/s Puja Textiles manufactured and removed clandestinely grey cotton fabrics measuring 1,75,770.20 meters valued at Rs.55,37,170/- evading Central Excise duty of Rs.29,17,122/- during the period March, 98 to August, 99. The raw materials were procured from M/s Jamshri, Gopal Jajoo and M/s Puja Textiles without any CT-3 certificates and without payment of duty and the finished fabrics were cleared into the DTA without obtaining any permission from the Development Commissioner and without payment of excise duty. Accordingly, a show-cause notice dated 14.1.2002 was issued demanding excise duty of Rs.1,51,52,772/- under the provisions of Section 11A of the Central Excise Act, 1944 along with interest thereon under Section 11AB ibid. The notice also proposed to impose penalties on the appellant under Section 11AC ibid and on the Managing Director of the appellant firm under Rule 209A of the Central Excise Rules, 1944 read with Rule 25 of the Central Excise Rules, 2002. The notice was adjudicated and the duty demands were confirmed along with interest and also by imposing equivalent amount of penalty. A penalty of Rs.15 lakhs was imposed on Shri Rajesh Somani, Managing Director of the appellant firm. Aggrieved of the same, the appellants are before us.
3. The learned Counsel for the appellant makes the following submissions: -
(i) Vide permission dated 12.9.1997, the appellant had authorization to make advance DTA sale for a quantity of 1,94,543 meters of value Rs.48,63,575/- and this permission was valid upto 31.7.1998. Subsequently, vide permission dated May 6, 1999, the appellant was given permission to clear into DTA a quantity of 31,144.81 meters valued at Rs.12,29,908/- on the basis of production and exports made during 1.7.1998 to 31.8.1998 and this permission was valid up to 30.9.1999. Vide another permission dated May 6, 1999, the appellant was permitted to clear into DTA a quantity of 41,409 meters of grey fabrics valued at Rs.17,59,882/- based on their production and exports during 1.10.1998 to 31.12.1998 and this permission was valid till 31.12.1999. Again vide permission dated 17.9.1999, the appellant was permitted to clear into DTA a quantity of 2,47,879/- meters of grey fabrics valued at Rs.86,75,765/- based on the production and exports made during April, 1999 to June, 1999 and this permission was valid till 30.6.2000. Thus, the appellant had requisite permission for clearance of grey fabrics into DTA during the impugned period and the adjudicating authority in para 14.9 of the impugned order had held that the clearance of the grey fabrics by the appellant into DTA were subsequently regularized and they have to be considered as cleared with the permission of the Development Commissioner and the goods cleared were held to be allowed to be sold in India by the Development Commissioner. Accordingly, he ordered that the appellant is liable to pay duty on the clearance made in terms of the provisions of Section 3(1) of the Central Excise Act, 1944. However, the adjudicating authority has not extended the benefit of Notification No. 8/97-CE dated 1.3.1997 which provided for levy of excise duty on goods produced in the 100% EOU, if such goods are manufactured wholly from the raw materials produced or manufactured in India at the rate equal to that applicable to domestic manufacturers.
(ii) The adjudicating authority has also not extended the benefit of Notification No. 2/95-CE dated 4.1.1995 which provided for an additional rate of duty in respect of clearance from 100% EOU to DTA subject to certain conditions. Thus, while confirming the duty demand, the adjudicating authority has computed the duty demand at the rate applicable to like goods at the rate when imported into India. Therefore, the impugned demands are not sustainable in law. Accordingly, he pleads for allowing the appeal.
4. The learned Addl. Commissioner (AR) appearing for the Revenue reiterates the findings of the adjudicating authority.
5. We have carefully considered the submissions made by both the sides.
5.1 As regards the issue whether the goods cleared by the appellant during the impugned period were allowed to be sold in India, the adjudicating authority has clearly held in para 14.10 of the impugned order that the goods in question, namely, grey fabrics manufactured and cleared by M/s VTM to the DTA to M/s Jamshri and M/s Pooja Textiles have to be considered as cleared with the permission of the Development Commissioner. Hence, I hold that the aforesaid goods were allowed to be sold in India by the Development Commissioner, and accordingly, the said goods are liable for payment of duty as provided in the proviso to Section 3(1) of the Central Excise Act, 1944. This finding of the adjudicating authority is not disputed either by the appellant or by the Revenue. The only dispute is with respect to eligibility to benefit of Notification No. 8/97-CE dated 1.3.1997. The said notification granted exemption on finished products, rejects and waste produced or manufactured in a 100% EOU wholly from the raw materials produced or manufactured in India and allowed to be sold in India, from so much of the duty of excise leviable thereon as is in excess of amount equal to the duty of excise leviable under Section 3 of the Central Excise Act, on like goods, produced or manufactured in India other than in a 100% EOU, if sold in India. The said notification was amended vide Notification No. 7/98-CE dated 2.6.1998 so as to be provided something added any provisions thereof which reads as follows: -
Provided that nothing contained in this notification shall apply where such finished products, if manufactured and cleared by unit other than a 100% EOU, are wholly exempt from the duty of excise or are chargeable to Nil rate of duty. Since grey fabrics of cotton are completely exempts from duty vide Notification No. 5/98-CE dated 2.6.1998 for the period after 2.6.1009, the appellant could not have availed the benefit of Notification No. 8/97-CE and, therefore, the appellant was liable to pay duty in terms of the provisions of Section 3(1) of the Central Excise Act, 1944. Even for the period prior to 2.6.1998, the domestic manufacturer who produced goods was eligible for the Nil rate of duty on grey fabrics, if such grey fabrics were produced out of duty paid yarn. In other words, there was no unconditional exemption to grey fabrics if produced by a manufacturer from the DTA. From the records of the case, it is evident that the appellant obtained raw materials duty free i.e. without payment of duty removed clandestinely from M/s Jamshri, Gopal Jajoo and M/s Pooja Textile without the cover of a CT-3 certificate and without the cover of a Central Excise invoice. This position has been clearly admitted. If that be so, the appellant cannot legitimately claim the benefit of Notification No. 8/97, even for the period prior to 2.6.1998 and, therefore, the claim of the appellant in this regard is to be rejected.
5.2 As regards the claim of the appellant for the benefit of Notification No. 2/95, which provided for an additional rate of duty of 50% of each of the duty of customs leviable on like goods produced and manufactured outside India, if imported into India. The said exemption was subject to two conditions. The condition required to be satisfied by Notification No. 2/95, where - (i) the amount of duty payable in the above Notification should not be less than the duty of excise leviable on like goods and manufactured by a DTA unit, (ii) the Notification will not apply to goods, which are chargeable to Nil rate of duty, and (iii) the value of the goods cleared for home consumption, which not exceed 25% of the total value of production of goods which are identical in all respects to those under clearance and the balance 75% of production is exported out of India. The adjudicating authority has given a finding that M/s VTM, the appellant has not produced any evidence to prove that the goods in question sold by them in the DTA was well within the aforesaid entitlement. ON the contrary, from the evidence available on record, it is seen that the appellant had already exhausted the permission received from the Development Commissioner and the DTA sales were effected in anticipation of subsequent permission from the Development Commissioner. In other words, at the time of clearance of the goods, the appellant did not have the requisite permission. From the permission dated May 6, 1999 relating to grant of permission for DTA sale in respect of exports period 1.7.1998 to 30.9.1998, it has been clearly stated that as against the permission for clearance of 1,94,543 meters of grey fabrics valued at Rs.48,63,575/-, the appellant had cleared 1,94,544 meters valued at Rs.64,67,145/- for the period 1.4.1997 to 30.9.1998 and the excess advance DTA sale effect worked out to Rs.15,98,960.45 and, thereafter adjusting the excess sale, the appellant was permitted to make DTA sale for the balance DTA sale entitlement for the exports period 1.7.1998 to 30.9.1998. Thus, it is seen that in respect of the clearance within the permissible limit, the appellant was eligible for the benefit of Notification No. 2/95-CE dated 4.1.1995 only in respect of the excess clearance than those provided, the appellant would be liable to pay excise duty without the benefit of Notification No. 2/1995.
5.3 From the impugned order, it is seen that the duty demand has been confirmed on the entire quantity without allowing the benefit of Notification No. 2/95, which is not correct. Therefore, the duty liability needs to be recomputed by extending the benefit of Notification No. 2/95 in respect of clearances made within the permissible limit and only in respect of the excess quantity, the benefit of the notification would not apply.
6. In view of the above, the matter is to be considered afresh by the adjudicating authority and the duty liability needs to be recomputed considering the claim of the appellant for the benefit of Notification No. 2/95-CE in respect of the clearance value within the permissible limit. Accordingly, the matter is remanded back to the adjudicating authority for fresh consideration, the appeals are allowed by way of remand.
(Pronounced in Court on ) (Anil Choudhary) (P.R. Chandrasekharan) Member (Judicial) Member (Technical) Sinha 7